German Stocks Advance as Merkel, Hollande to Protect Euro

German stocks climbed for a third day after French President Francois Hollande and German Chancellor Angela Merkel said they will do everything to protect the euro and the U.S. economy grew more than predicted.

European Aeronautic, Defence & Space Co. jumped 5.3 percent after increasing its full-year earnings projection. Bayerische Motoren Werke AG led carmakers higher, rising 2.9 percent. Linde AG gained 3 percent after the world’s second-biggest maker of industrial gases said it will reach a profit goal earlier than planned. Rhoen Klinikum AG declined 2 percent after cutting its net-income forecast for this year.

The DAX Index gained 1.6 percent to 6,689.4 at the close in Frankfurt, rebounding from an earlier decline of as much as 1.1 percent. The gauge has advanced 0.9 percent this week. The benchmark measure yesterday rallied the most this month after European Central Bank President Mario Draghi said policy makers will do whatever it takes to preserve the euro. The broader HDAX Index also rose 1.6 percent today.

“Draghi’s statement was a new factor and positive for the market,” said Yves Marcais, an equity sales trader at Global Equities in Paris. “Investors were waiting six months for that. Declines in stocks earlier this week were exaggerated.”

The ECB may begin a new round of joint-bond purchases to ease borrowing costs in Spain and Italy, as Merkel and Hollande pledged to do everything to protect the euro.

“France and Germany are fundamentally attached to the integrity of the euro zone,” the two leaders said in a joint statement today. “They are determined to do everything to protect it.”

U.S. Economy

In the U.S., a Commerce Department report showed that the U.S. economy expanded in the second quarter more than economists had estimated. Gross domestic product, the value of all goods and services the nation produces, rose at a 1.5 percent annual rate, beating the 1.4 percent median forecast of 81 economists in a Bloomberg News survey. Consumer purchases grew at the weakest pace in a year.

EADS jumped 5.3 percent to 29.81 euros. Europe’s biggest aerospace and defense company almost doubled first-half profit and increased its estimate for full-year earnings to 2.7 billion euros ($3.3 billion) from at least 2.5 billion euros.

Bayerische Motoren Werke AG advanced 2.9 percent to 59.15 euros. Daimler AG, the world’s third-largest maker of luxury vehicles, gained 2.8 percent to 39.33 euros. A gauge of auto stocks was the best performer of the 19 industry groups on the Stoxx Europe 600 Index, jumping 2.9 percent.

Porsche, Linde

Porsche SE added 1.8 percent to 40.50 euros. The sports-car maker being purchased by Volkswagen AG, said first-half profit jumped 21 percent on demand for a new generation of the 911.

Linde gained 3 percent to 121.50 euros. The company reported second-quarter profit in line with analysts’ estimates and said it will reach its 2014 profit goal in 2013.

Rhoen Klinikum slipped 2 percent to 17.50 euros after lowering its net-income forecast because of a slowdown in the restructuring of a German hospital unit and costs from Fresenius SE’s failed takeover bid for the company.

Deutsche Boerse AG slid 2 percent to 40.25 euros. The German exchange blocked from buying NYSE Euronext by the European Commission in February said net revenue for 2012 will probably fall short of its forecast range.

Stada Arzneimittel AG, a German generic-drug manufacturer, lost 3.2 percent to 25.30 euros. Citigroup Inc. cut its recommendation on the shares to neutral from buy, citing continued economic concern in Europe.

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